Two companies or organisations wishing to come together to jointly promote and carry out engineering or construction projects should find this joint enterprise agreement useful for construction projects. Once a contractor has identified a potential joint venture partner, the first question will likely have to be asked about how they intend to structure the joint venture. The partners of the joint venture may opt for a purely contractual relationship (i.e. without the creation of a separate joint venture) or for the creation of a joint venture in which each joint venture partner participates. First, it is important to define the specific tasks and purposes of the joint venture and to define precisely what partners require of each partner in terms of cooperation and standards of cooperation and good faith (if any). For a shorter and simpler tendering agreement, which could then become a full joint venture, see our document B138 In 2012, an EC Harris report warned that one in five British joint construction firms would end in a dispute between the parties. This is mainly due to the fact that the two parties and their authorized representatives meet to do business related to [JointVenture.Name]. Both parties agree on all decisions, obligations or obligations related to the joint venture. In the event that the two parties fail to reach any mutual agreement, a mutually acceptable third party will act as an arbitrator to resolve these disputes and reach a mutually acceptable conclusion. Finally, in the case of unincorporated joint ventures, it is essential to determine how the joint venture partners share responsibility for all of the owner`s claims. For example, will this be allocated to each joint venture partner in proportion to its holdings, or should it be awarded on the basis of a fault? Both parties agree to preserve the same shares of [JointVenture.Name], including tangible assets, profits and liabilities related to the joint venture.
Tax consequences – The tax effects of carrying out a project through a registered joint venture, as opposed to a purely contractual joint venture, must be taken into account, in particular any potential risk of double taxation. The obligations arising from the construction contract are joint and several obligations. The entire joint venture contract is governed by the laws of the state [JointVenture.State]. In point 10.6 above, the contracting parties agree not to exercise a right of “hanging” with the bankers of the joint venture. The objective is to ensure that the bank cannot contract funds from the joint venture`s accounts in order to compensate for any debts of one of the parties to the bank. Detailed schedules are provided to describe the project manager`s authority, the in-kind contributions made by the parties to the joint venture, and the initial working capital requirements. For joint ventures to function effectively, it is important that, in principle, when the joint venture has been established, it may also be possible, in certain circumstances, to take legal action against a joint venture partner for violating that company`s constitutional documents. Indeed, in some legal systems, the statutes of a company act as a contract between a company (joint venture vehicle) and its shareholders (partners of the joint venture). However, this depends on the law of the state in which the joint venture is integrated and, in a number of systems, there are strict limits on when a shareholder right can be invoked on that basis.